There are four key financial elements to the deposit return scheme. The 20p deposits, the producer fee, the retail handling fee and the sale of collected materials.
The bulk of the revenue will be in continual circulation, transferring every time the drinks container changes hands. Producers will receive 20p when they sell their products to wholesalers who will receive this back when they sell to retailers. They in turn will receive it back from consumers who buy the products and they will be reimbursed when they return the empty container to a return point. This loop ensures that nobody is out of pocket.
Producers will have to pay a small fee for every container they produce to help fund the operation of the scheme.
There are two ways in which Circularity Scotland will use the money from producers and unreclaimed deposits. Everyone operating a return point will be paid handling fees in recognition of the time, space and equipment required to handle deposits and returned containers.
It will also be used to help fund the logistics operations required to collect containers for recycling and the operating costs of the scheme administrator.
The 20p deposit will remain in circulation all the time, passing from the person receiving the container to the person accepting it.
The producer or importer pays a 20p deposit for each drinks container they put into the Scottish market. This is paid to the scheme administrator and they inform Circularity Scotland how many containers they sell so that producer fees can be allocated accordingly.
If the product is passing through a wholesaler, they will pay the producer or importer a 20p deposit which they will recoup when they sell on to the next business in the supply chain.
The retailer will then pay their drinks supplier 20p per container which they will get back from the customer at the point of purchase.
The retailer receives their 20p back from the customer when they pay the container or bottle deposit at the point they purchase their drink.
The consumer gets their 20p back when they take the empty container back to a return point.
The scheme administrator uses the 20p they originally received from the producer or importer to refund the return point operator.
Not all hospitality businesses will have to charge their customers a 20p deposit. If you only serve drinks in single use containers on your premises, you can operate a “closed loop system”. That involves collecting all of the containers used on your site and reclaiming the 20p container deposit yourself through the scheme.
If, however, you serve drinks for customers to take away and consume elsewhere, you will have to follow the same procedure as other retailers. You’ll charge customers the 20p deposit and must operate a return point, reimbursing any customer who presents a container included in the scheme.
Empty containers can be returned to any of about 30,000 return points all over Scotland. Basically, you’ll find them anywhere you can buy drinks in deposit bottles or cans. The simplest of these will simply repay you over the counter with cash although some reverse vending machines will refund consumers using a voucher which can be spent to the full value of the original deposit instore.
The producer fee is there to make up any shortfall in revenues needed to operate the scheme. Producers recognise that they must take responsibility for the packaging containing their products and the producer fee reflects that.
Handling Fee for Return Point Operators
Return point operators will receive a handling fee designed to cover the costs of the time, equipment and additional storage space needed to operate the scheme. The level of this fee will be determined annually by Circularity Scotland, based on data and analysis provided by independent consultants to ensure it remains reasonable and current.
The deposit has been set by Scottish Government at 20p within the Deposit and Return Scheme for Scotland Regulations 2020. For the sake of simplicity and clarity it has been set at the same price for containers of all sizes, made from all, in-scope, materials.
The figure of 20p was arrived at for a number of reasons. Firstly, it is enough to incentivise consumers to do the right thing and return their containers but it’s not so much that it will deter purchase.
The figure is also in line with successful deposit return schemes around the world and it emerged as the optimal deposit level during extensive public consultations by the Scottish Government.
The scheme has been carefully designed to be largely self-funding but, ultimately, the producers/importers/brand owners of the containers will have to pay a little to ensure that what they produce doesn’t have a negative effect on the environment. Additional income from the sale of the recyclable materials collected and unredeemed deposits will also help fund the scheme. These revenues will fluctuate from year to year and the producer fee will be adjusted annually to reflect this.